PNG landowners risk being swindled under proposed mining law | Pacific Beat

PNG landowners risk being swindled under proposed mining law

PNG landowners risk being swindled under proposed mining law

Updated 15 February 2012, 12:15 AEDT

A senior academic says landowners will need proper legal representation and guidance if Papua New Guinea introduce proposed changes to the country's mining laws.

The PNG government is reviewing existing laws to revert ownership of resources under the land and seabed to the traditional owners. Professor Spike Boydell from Sydney University of Technology's Asia-Pacific Centre for complex real property rights welcomes the move to make compensation for landowners more equitable. But he says there's a risk they won't be properly advised when dealing with mining investors and could sign away their property rights for short term and inadequate financial gain.

Presenter: Emma Younger

Speaker: Professor Spike Boydell from Sydney University of Technology's Asia-Pacific Centre for complex real property rights

BOYDELL: What we have to look at is what this actually means and how, if it progresses do we protect the interests of the customary landowners and do we look at a situation which we can have equitable prodevelopment compensation for mineral resource use in the country.

YOUNGER: What are the dangers in giving full ownership over to landowners?

BOYDELL: The concerns relate to how well customary landowners are actually represented. In Papua New Guinea, they have a land grouping corporation act that allows customary landowners to formalise themselves and give themselves locus standi by or legal identity. One of the challenges that seem to be afoot are that the land grouping corporation act of 1974 is being perhaps inappropriately utilised and so there were amendments to that put through parliament in I think it was 2009, but they are yet to be gazetted. Now if those are gazetted, I think the likelihood of the new government gazetting those is very, very high, so it will actually protect the formalisation of those land groups and stop a certain amount of infighting that has occurred.

The other issue that crops up is how well represented is a customary land owning group who are perhaps living a subsistence lifestyle, when confronted with outside international mining interests. Do they have proper valuation advice to identify effectively the rights, to value the rights that they have over land and also are they properly legally represented. Those currently are two potential weaknesses which the government is aware of and a number of NGOs are working with customary landowners to help them build their capacity. Now this builds landowner capacity, it builds the strength of their situation, but they lack the funds to pay for some of those resources. What we have suggested is that if there are mining interests who want to discuss opportunities with landowners, it's not unreasonable to expect mining interests to put down a bond to actually start those discussions to ensure that the customary landowners are represented.

The downside of that, of course, is that the deals which the landowners may strike could be more beneficial to the landowners than they have been in the past and that may result in a minor reduction of possible mining profits, but I think it will also reduce the risk for mining companies in as much as the risk will be reduced, because there's less likelihood of future comeback and future upset from those customary landowners.

YOUNGER: There's been talk also of mining companies being scared off the sector in PNG if this bill was passed. Would you expect that that would happen?

BOYDELL: Well, I think that's a perfectly understandable vocalisation from a mining companies, but there are a lot of resources in Papua New Guinea. I don't think that those resources are going to diminish if they investors look at other opportunities in the short term. What it will potentially mean is that the customary landowners will ensure that they understand what they're getting into much more clearly and they have time to reflect on the opportunity. So I don't think investors will go away for a long time, because they know they're dealing with significant mineral wealth, so I think that's just an understandable reaction and potentially an intimidation of the government and the government will have to show a lot of resolve if they're to deal with that sort of perception.

YOUNGER: Now, the argument has been made that if the government took a greater stake in ownership of these mining projects, instead of stepping out altogether, that they could reap the rewards from these projects and then distribute the wealth equitably to each group in PNG. Do you think this is a feasible path to go down?

BOYDELL: Well again, Byron Chan addressed that in his speech and to quote him they didn't see how the revenue generated from mining projects won't benefit the state if and when minerals are owned by traditional owners. On the contrary, the more money Papua New Guineans earn from the sale of the minerals, the more the state will benefit through revenue taxation. So rather than the state being an intermediary, he says the state more importantly as being a regulator and the state will still benefit because they will reap a level of taxation benefits from the minerals which are taken out of the ground.

YOUNGER: Do you feel that if a bill like this was passed, that it would set precedence for other countries around the region?

BOYDELL: I think a bill like this is very or a proposal like this is very important yes to the mineral rich countries in Melanesia and I know that certainly Fiji with its resources in gold, copper and bauxite. The Solomon Islands recent discovery of reserves in nickel will be looking at this very, very closely. Now obviously some of those states have seen their future in the economic prosperity from their share of mineral resources. One thing we have to remember is that the government hasn't always seen the most financially viable deal being struck. Now the same could said of customary landowners if they're not properly represented, but if there is proper representation and the provisions are put in place, then those other countries which will be looking at this very, very closely will find themselves in a situation where they may actually benefit and their customary landowners may actually benefit as well from this sort of initiative.

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